On 14 July 1991, members of Union of Reform Forces of Yugoslavia (SRSJ) from four coastal municipalities in the SR Montenegro, Herceg Novi, Kotor, Tivat and Budva, who were subsequently joined by reformists from Cetinje, formed the first regional Montenegrin political party - the Alliance of Reformists of the Montenegrin Coastline with Miodrag Marović as President.

Finally, on 12 June 1993, the Independent Organization of Communists of Bar, the Alliance of Reform forces of Yugoslavia for Montenegro and the Party of National Tolerance merged into it, forming the Social Democratic Party of Montenegro and uniting the forces that opposed the policies of the Milošević regime during the Yugoslav wars.

Notable founders include Žarko Rakčević, Dragiša Burzan and Ljubiša Stanković.

Allying itself with the DPS and Đukanović ahead of the 1998 parliamentary elections allowed the SDP to enter the parliament for the first time in its history.

Since the 1998 election, SDP has continued to a minor coalition partner of DPS and a part of every Montenegrin government between 1998 and 2015.